where xij and yrj are observed values of the ith input and the rth output for hospital j. Hospital CV is virtually created as a ‘‘projected hospital’’ for Hospital C. The inputs (outputs) of Hospital CV are the linear combinations of corresponding inputs (outputs) of all hospitals in the sample. The linear combinations are formed by weight kj. The outputs of Hospital CV must equal to or greater than the outputs produced by Hospital C. The efficiency of Hospital C is the potential proportionate reduction in its inputs by factor ZC relative to Hospital CV. For evaluating the efficiency of all hospitals in the sample, Eq. (1) is solved n times giving n sets of kj, one set for each hospital to determine its relative efficiency. Hospitals that have efficiency scores of 1 are relatively technically efficient. Those with the scores of less than 1 are relatively inefficient.